Perspective... Turmoil in Thailand is making marketers nervous

At press time, the army had taken charge, and, among other things, the media had been gagged from publishing or broadcasting images that could cause the public to panic. For agencies and clients, the apparent lawlessness in the country is chaotic and frightening.

Thousands of protesters occupied the Prime Minister's official compound in late August, vowing to remain until he and his elected Government fall. The demonstrators literally set up a small community complete with medical tents, food stalls and even souvenir stands.

Worryingly, the protesters were able to shut down exit points, such as airports, and there were violent attacks on Government buildings, including a state-run television station.

The movement's decision to target the tourist industry has put Thailand's reputation as a MICE destination under threat, because organisers of major events cannot bank on the former stability. With the worst yet to come, the Tourism Authority of Thailand will have its work cut out in coming months as it attempts to rebuild visitor confidence. But with a budget cut in store, it’s anyone’s guess how effective the body’s new advertising campaign will be.

For the marketing communications industry, the years of boom must seem a distant memory. Most will tell you that the television chef turned prime minister’s controversial and abrasive style was always going to lead to a bumpy ride that would inevitably impact consumer confidence.

Whatever the outcome, Bangkok has not experienced this degree of political chaos since May 1992, when anti-military government street protests took a violent turn. Indeed, today, political instability has overtaken inflation as the biggest threat to the Thai economy. The stock market has fallen about 23 per cent since the street protests began in May and wobbled at times last week when violence spiked. The Thai baht hit a nine-month low and continuing uncertainty is likely to hold it down.

Adspend, which in buoyant times has seen growth of 25 per cent, has flattened to just three per cent this year. One indicator of the nervousness among advertisers is the announcement that the Bangkok Post will increase its cover price, in a bid to offset a drop in adspend and rising production costs. Forget about exceeding expectations, the challenge for agencies now will be to meet targets. Unsurprisingly, it is the Thai agencies dependent on media commissions that will be hit hardest as clients cut spend. Further retrenchment is, unfortunately, very likely.

Even major agencies, however, are starting to feel the affects of prolonged political strife, which is causing some multinational companies to delay or postpone campaigns. In a vote of no confidence, clients, such as Unilever, are relocating regional HQs out of Bangkok altogether in favour of neighbouring Singapore’s stability.

Offices have been shut twice in as many weeks. Expats (essential to managing regional accounts) have been hit by visa requirements that reduce work permits from one year to three months, making it impractical for them to be based in the country.

Without the consistent regional spenders to keep them afloat, many agencies are doing well to prepare for more uncertainty and the usual holding back by clients inclined to keep purses closed until the future is clearer. They are painfully aware that this caution comes on top of a global economic situation that is beginning to show signs in Asia.

But, with the Government in crisis, who is managing the troubled Thai economy?